Trying to cash in on the telecom boom, telecom equipment companies are stepping up their presence in the Saarc region, which is currently witnessing the highest growth in the telecom sector.

Companies view Saarc countries as a key catalyst for the proliferation of wireless broadband networks and mobile WiMax in the Asia Pacific region. In fact, India has already become a benchmark for several developed and developing countries.

However, the lack of seamless trade policies and regulations are likely to throw a spanner in the path of telecom equipment companies. The prominent challenges faced by operators include development of broadband connectivity, rural teledensity, and lack of basic infrastructure like road connectivity, mass transportation, and energy.

The region is yet to experience the true convergence of voice, video, and data. With true convergence, the benefits of a single infrastructure would greatly benefit several sectors, especially the IT/ITeS industry.

Notwithstanding the challenges, top telecom companies like Huawei, ZTE, Nokia Siemens Networks, Ericsson, Alcatel-Lucent, Alvarion, and Cisco feel that the phenomenal growth recorded in the Saarc region, in the recent past, can be sustained for some more time.

The thrust is backed by reasons. The subscriber growth registered by Saarc countries in the recent years has been phenomenal; some Saarc countries have witnessed a doubling of subscriber base. With approximately 400 mn subscribers, Saarc countries are strengthening their footprints in the world telecom scenario. A booming telecom sector has brought many positive changes in the economy and socio-economic sectors of Saarc countries.

The telecom equipment companies believe that the return on investment (RoI) is good, and can be sustained in the years to come. Moreover, the launch of new services and applications will only add to higher returns and better investment avenues.

The telecom revolution is in part, thanks to the innovative strategies framed by service providers and telecom equipment companies. Here is a look at the strategies telecom equipment companies will follow to garner the maximum share of the burgeoning telecom market.

Demanding Operators
Poor infrastructure. miserable road connectivity, mass transportation, and energy are the key challenges being faced by the operators in the Saarc region. Poor broadband connectivity and low rural teledensity further increase the problems faced by operators.

Operators believe that reduction of the total cost of ownership (TCO) is imperative to the growth of telecom in the region. “Operators talk about TCO from two perspective: the operator and the consumer, where the operator TCO has a direct impact on the consumer TCO,” Michael Kuehner, head, sub-region at Nokia Siemens Networks, says.

The TCO of the consumer includes the service fee, taxes, and the mobile handset price. Many potential subscribers have a communications budget of just $3 per month or less. To serve these customers and achieve healthy profitability, it is crucial to reduce the TCO of communications services.

“By offering end-to-end solutions that focus on extending coverage and capacity, lowering network capex and opex and enabling low-cost services for end users on low budgets, we have the know-how and solutions to help service providers build a robust business case in a low-ARPU environment,” Kuehner says.

The operator TCO needs to take into account not only innovative technologies but also innovative business models to drive economic growth. It is about understanding the position in an environment with many new players, defining this position and the value chains, and securing this position through a viable business model.

As the number of service providers increases in the market, their challenge is to understand the IP technology and operationalize it to run their networks.

In addition, given the growth that telecom service providers are witnessing in the region, Cisco plans to focus on helping service providers manage this rapid growth. In more mature markets like India, Cisco believes in helping service providers monetize their infrastructure by providing new services to customers and by creating new revenue streams.

The demand from service providers are coming from three perspectives. “Service providers are not only expanding their own enterprise networks but also bundling network and communication products with their bandwidth. Apart from that, they are also creating managed services offering around enterprise products,” Shekhar Agarwal, VP, South Asia, Enterprise Business Group, Alcatel-Lucent, says.

Service providers believe that rapid deployment of cycles is essential to meet the growing demand in the region. “The demands of service providers in Saarc countries are predominantly multi-phased: in the short term, service providers are looking for extremely rapid deployment cycles of fixed and portable wireless broadband networks and services, coupled with a strict demand for optimization of the business case challenge, in the region. This challenge on the service provider's side is supported by product and solution customization to fit the exact needs and requirements of customers,” Rajesh Kapoor, director, Sales, Alvarion, says.

In the long term, service providers are preparing for the addition of mobile applications and services to their mobile WiMax networks, and this must be done with standard-based technologies to provide investment protection and leverage on price reduction that comes with volume manufacturing.

Challenging Conditions
Universal access to information services can enhance the lives of millions of people in the Saarc region. Following the success of affordable cellular voice services, information services can bring benefits in sectors such as healthcare and education.

Successful information services require the cooperation of different stakeholders in order to ensure affordable access to technology, relevant and immediately beneficial services, and the required skills. The used technologies can vary, for example, from low-cost PCs to SMS-based services. For the companies involved, this will also mean profitable business.

Naresh Wadhwa, president and country manager, India and Saarc, Cisco, says, “Over the last decade, the domestic market in the region has really evolved and grown in sophistication. In the initial years, our focus was on educating customers about networking and its impact. Customers now view networking as a strategic asset, and, as a result, one can no longer offer point products. Today, our customers view us as business advisors and want us to offer solutions that can improve business performance.”

The most common challenge these markets face is the shortage of networking talent. With the region becoming an IT/ITeS hub, there are strong industry concerns about a demand-supply gap on one hand, and employability of graduates on the other. Students need to be equipped with skills that are aligned with today's global workforce.

According to Kapoor, service providers, together with their local partners in different countries in the region, face some challenges typically found in the markets with high-growth potential. Perhaps the key challenge is the need to rapidly provide the demand for a stellar rise in the broadband demand in the region as more people and governments realize that a key catalyst to bridging the digital divide is the existence of readily available primary broadband connectivity. This is done by very quick deployment cycles with super fast response to the needs of operators in different countries.

A different type of challenge they are facing is in the business model where a growing economy demands broadband connectivity to support and enhance growth but at the same time can provide, at least initially, moderate to low ARPU.

Shekhar Aggarwal of Alcatel-Lucent sees a lot more opportunity than challenges since the market is growing at a fast pace.

Movement from pure voice to the Internet is another challenge faced by operators, believes Kuehner of Nokia Siemens. Some of the changes are: the voice service is easy to understand; it covers local and relevant content. Making a phone call is easy and doesn't need much intelligence. This is not true of the content currently available on the Internet.

The improved coverage penetration and affordable phones lead to over 3 bn connected mobile voice consumers globally. Information services in developing markets, however, don't cover consumer education, motivation, and access to respective technologies easily. Many consumers don't know what Internet or mobile Internet is and the value they can derive from it.

Consumers require local and relevant content with a strong need to understand the immediate value. access alone won't help; they need to cover consumer education and motivation, all under the umbrella of affordability. This shows that they need to change their approach and look much more into consumer capability and motivation on the journey to 5 bn connections by 2015.

Kuehner says, “We believe that only if we understand consumer needs, especially in the new growth markets, can we prove the value of information services to these consumers. Without this, services would not be consumed.”

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